For some reason the "jittery" steering issue disappeared. I can't explain why. I did however have another problem related to dosbox not noticing the brake pedal as a separate joystick (which i am using a work-around)

I did play a little today, and with the game running slower now I dropped my lap time about 3 seconds on detroit's street circuit. Immediately the game was way easier because I didn't realize how fast it was going.

What do you mean- you have the same problem with the "jittery" steering and calibration?
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I mean I have a problem with calibration yes. When I calibrate my controler it is impossible to put to the left-right at most.
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Michael82- your calibration does not need to go all the way to the left and right of the box. The whole point of calibrating is telling the game which value you can reach as a maximum, this way it assigns that value to the maximum lock. That is OK. It works the same for me. I do not think it is a problem for you.

Do either of you that use dosbox SVN DAUM use a steering wheel and pedals? If so, did you have similar problems? what wheel and pedals do you use?

I use the keyboard only for gp2 (I never liked driving with the steering wheel in GPx games like I do with newer sims). I have an old logitech momo I'll give it a try tonight.

Something strange was going on that was causing the "jitteryness". I can not explain it. The problem is gone magically now. I actually got the steering wheel and pedals working great! I raced a full 100% race at the 80s Detroit street circuit and finished 7th! I had the difficulty on the 2nd hardest setting.